Contract Renegotiation and Organizational Design
This paper studies the implications of non-commitment for organizational design. An organizational form must trade-off between the coordination benefits associated with the centralization of information and its associated costs in terms of renegotiation. This analysis makes precise what these benefits and costs are. First, I characterize renegotiation-proof allocations for organizational forms that differ in the amount of decentralization that they support. Second, I compare these different organizational forms. The analysis shows that a complete decentralization of decision-making is always weakly dominated by more centralized structures when information is dispersed in the organization. Decision-making should always be in the hand of the player with the most important or relevant information. Ce papier étudie les implications pour la structure organisationnelle des problèmes de non-engagement. Une structure organisationnelle adéquate permet l'arbitrage entre les bénéfices et les coûts associés à la centralisation de la prise de décision. Parmi les bénéfices, on retrouve une meilleure coordination des informations des membres de l'organisation; parmi les coûts, on retrouve les inefficacités reliées aux difficultés d'engagement et à la renégociation. L'analyse démontre qu'une décentralisation complète est toujours faiblement dominée par une structure plus centralisée. Finalement, la prise de décision doit être conférée aux agents ayant l'information la plus cruciale pour la performance de l'organisation.
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